Leading prediction market operator Kalshi has been hit with a class-action lawsuit in an Alabama federal court, accused of operating an unauthorized sports betting enterprise in direct violation of state law.
Filed on January 29, 2026, by resident Christopher Jennings, the case marks the first time a prediction market has been targeted under Alabama’s notoriously stringent anti-gambling statutes.
Circumventing Alabama’s Gambling Ban
Alabama’s constitution maintains a strict prohibition on gambling, granting lawmakers no power to legalize the practice. Despite this, the lawsuit alleges Kalshi generated millions in untaxed revenue by offering “event contracts” tied to sporting outcomes, including point spreads and player props, which the plaintiff contends are disguised wagers.
While Kalshi operates as a regulated market under the Commodity Futures Trading Commission (CFTC), the complaint argues that its “event contracts” are indistinguishable from traditional sports betting. The filing further alleges that institutional market makers on the platform function similarly to bookmakers, putting individual Alabama residents at a significant disadvantage.
A Nationwide Legal Confrontation
This Alabama filing at the Federal Court is the second of its kind within the Eleventh Circuit, following a similar action in Georgia. Prediction market operators are currently facing legal scrutiny across eight federal circuits. In a parallel development in Massachusetts, a Superior Court judge recently ordered Kalshi to implement geofencing technology within 30 days to block local residents from accessing sports contracts following a January 20 ruling that barred unlicensed wagering.
The Alabama class-action lawsuit seeks damages under the state’s Loss Recovery Statute and a permanent injunction to block Kalshi’s services statewide.
